Since payday loan businesses have been popping up all over the country, the popularity of these loans has grown in recent years. With the economy still struggling to mend, people find themselves in situations where they need quick money to last until the next paycheck. This is where payday loans come in. These immediate financing options give people the money they need, but there are some restrictions. One major requirement is having a job. However, self-employment has risen with the growth of virtual businesses. Many payday lenders are now offering options for self-employed individuals.
With a traditional payday loan, the two most recent pay stubs are what lenders ask for. People who do not have an employer but draw an income elsewhere may be able to prove their income with bank statements. Not all payday lenders have the same qualification criteria when it comes to self-employment, so it may be necessary to check with several lenders. If the income shown on the bank statement is steady every month and the figures are similar, the lender may approve the loan.
Many companies only offer traditional loans. It is important to find out if a lender works with self-employed individuals before filling out an application. Some payday lenders today cater just to people who work for themselves. When gathering the necessary paperwork, keep in mind that people who do not receive payroll checks must show about three months of financial records.
This option does not apply to every self-employed person. Some individuals may be receiving monthly payments from a trust, settlement or other source of money. If this is the case, these types of income may be acceptable with many payday lenders. Always ask if these forms of income are acceptable before completing an application. Most lenders will ask to see payment records for the last few months. Many alternate income sources provide some form of monthly statement, which is usually enough to satisfy lenders.
Considering Other Options
It is important to read the entire loan contract before signing. Although payday loans are met with negativity from many other financial institutions, they are not bad when used properly. However, they should not be used to pay off long-term debts. The purpose of a payday loan should be only to get a person to his or her next income payment after experiencing a financial emergency. For example, a payday loan makes sense for a person who must pay for an unexpected vehicle repair. That repair may consume part of the person’s rent money, which is due the next day. In such a case, it may be cheaper to pay for the loan and its fees than it is to pay for late charges or risk getting evicted.
Payday loans are available for self-employed individuals, but it is important to use the funds responsibly. As a rule, it is best to avoid borrowing more than what can be repaid with the next expected income payment.
About the author:
Guest author Sharon Koontz is a financial guru and freelance blogger writing on behalf of nowaitloans.co.uk.